Real Estate Taxes - What Are They and How Do I Benefit?

A major benefit of owning a home is that the IRS allows homeowners to deduct real estate taxes in the year in which they are paid. Real Estate taxes are typically paid twice annually. However, homeowners who escrow taxes and insurance with their home loans will pay 1/12 of their annual bill monthly. For homeowners who escrow, mortgage lenders make it simple to itemize real estate property taxes paid. In late January, you'll receive a 1098 From which lists mortgage interest paid in the prior year, along with a form detailing the amount paid into escrow and the amount disbursed from escrow to your local taxing authority. You may claim the amount disbursed for real estate taxes on your federal income tax returns. If your home does not have a mortgage, or if you don't escrow, keep track of your paid real estate tax bills and claim that amount on your federal tax returns.

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